nvidia's soaring stock: can growth defy valuation concerns?
New York, Friday, 30 May 2025.
nvidia’s stock is near its peak, driven by ai demand and data center growth. the stock trades at 44 times its earnings. ceo jensen huang sees a $50 billion opportunity in china. access is limited by export restrictions. nvidia’s q1 revenue hit $39.1 billion, a 73% jump. gaming and ai pc sales surged 42%. analysts question if nvidia’s growth justifies its valuation. a potential $8 billion sales hit looms due to china export restrictions. could the ai leader’s rise face a correction?
q1 performance and market reaction
Nvidia’s first-quarter earnings, reported on May 28, 2025, showed significant growth, with revenue reaching $44.1 billion [1]. This represents a 69% year-over-year increase [1]. The company’s stock surged approximately 5% in after-hours trading following the earnings release [1]. Adjusted earnings per share were reported at $0.96 [1]. This performance surpassed analyst expectations, which had projected $0.93 per share on sales of $44.3 billion [1]. The surge reflects investor confidence in Nvidia’s continued dominance in key sectors [3].
data center and segment growth
Nvidia’s data center revenue was a key driver, hitting $39.1 billion, a 73% year-over-year increase [1]. Cloud providers account for roughly half of this data center revenue [3]. Gaming and AI PC sales also saw substantial growth, up 42% [1]. Professional Visualization sales increased by 19%, while Automotive and Robotics revenue grew by 72% [1]. This diversified growth highlights Nvidia’s expanding influence across multiple technology sectors [1][3]. Blackwell chips comprised 70% of Nvidia’s data center sales during the quarter [3].
china challenges and market share
Despite overall growth, Nvidia faces challenges in the Chinese market due to export restrictions [1][3]. These restrictions are expected to result in an $8 billion hit to sales in the upcoming quarter [1]. CEO Jensen Huang noted that Nvidia’s market share in China’s AI market has decreased from 95% in 2021 to 50% currently [9]. Huang stated the U.S. policy assumption that China cannot make AI chips is wrong [3]. Nvidia is exploring options for China, but the restrictions pose a significant headwind [3].
analyst perspectives and valuation concerns
Analysts have mixed views on Nvidia’s valuation. The stock trades at 44 times its trailing earnings [1]. Some analysts suggest the stock is overvalued at its current price of approximately $140, with one estimate suggesting a potential downside to $100 per share [1]. JPMorgan analyst Harlan Sur maintains a positive outlook, noting Nvidia’s lead in silicon, hardware, and software platforms [3]. Morgan Stanley’s Joseph Moore believes Nvidia is overcoming digestion fears, citing durable growth drivers [3]. Deutsche Bank’s Ross Seymore highlights Nvidia’s technology leadership and Blackwell shipment growth [3].
future outlook and competitive positioning
Nvidia is positioning itself for future growth through its Blackwell cloud platform, available on major cloud services [1]. Microsoft is a significant buyer of Blackwell chips and deployed “tens of thousands” of Blackwell GPUs in the first quarter [1][3]. Shipments of Blackwell Ultra systems are expected to begin during the current quarter [3]. Jensen Huang emphasizes the importance of the entire technology stack, including 6G and quantum computing, for maintaining U.S. global infrastructure leadership [3]. The company’s Q1 revenue was $44.11 billion, up 69% year-over-year [9].